Ezeatm Ltd v Zani - [2014] WASC 25

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EZEATM LTD -v- ZANI [2014] WASC 25

CORAM: LE MIERE J

HEARD: 14 JANUARY 2014

DELIVERED : 31 JANUARY 2014

FILE NO/S: CIV 2959 of 2013

BETWEEN: EZEATM LTD
Plaintiff
AND
TODD ZANI
Defendant

Catchwords:

Practice and procedure - Interlocutory injunction - Restraint of trade covenant - Prima facie case that restraint is enforceable - Prima facie case for final relief established - Damages inadequate - Balance of convenience favours grant

Legislation:

Nil

Result:

Interlocutory injunction granted

Category: B

Representation:

Counsel:

Plaintiff: Mr C E Chenu
Defendant: Mr I R Freeman

Solicitors:

Plaintiff: Bennett + Co
Defendant: Lavan Legal

Case(s) referred to in judgment(s):

Emeco International Pty Ltd v O'Shea [2012] WASC 282
Greetings Oxford Koala Hotel Pty Ltd v Oxford Square Investments Pty Ltd (1989) 18 NSWLR 33
Hunt v Pascoe (1990) 21 NSWLR 10
WPS Enterprises Pty Ltd v Radford (2009) 22 VR 1

LE MIERE J: By an agreement dated 8 June 2011 (Asset Sale Agreement) between the plaintiff (then named Oakajee Investments Ltd), ACN 143 866 666 Pty Ltd (then named Ezeatm Pty Ltd), which I will refer to as ACN, the defendant (Todd Zani) and his brother (Chad Zani), ACN agreed to sell to the plaintiff the ATM deployment business carried on by it (the Business) together with assets used to carry on the Business. Clause 14 of the Asset Sale Agreement provides, amongst other things, that the Vendor Parties, which includes the defendant, will not engage in any business or activity which is similar to and in competition with the Business.
By an agreement made in 2011 (Executive Service Agreement) between the plaintiff and the defendant, the plaintiff employed the defendant as a fulltime executive director. The Executive Service Agreement also contains a covenant restraining the defendant from engaging in any business or activity similar to and in competition with the Business. The plaintiff terminated the defendant's employment on or about 3 June 2013 by notice. The restraint clause in the Executive Service Agreement continues in effect for one year after its termination.
Star Payment Systems Pty Ltd was registered on 10 September 2013 and carries on an ATM deployment business. The plaintiff says that the defendant is involved with Star Payment Systems and its business in breach of the restraint covenants in the Asset Sale Agreement and the Executive Services Agreement. The plaintiff has applied for an interlocutory injunction to restrain the defendant from being involved with Star Payment Systems or otherwise acting in breach of the restraint covenants. The plaintiff put its case in reliance upon the restraint covenant in the Asset Sale Agreement and it is unnecessary to consider the restraint in the Executive Services Agreement for the purposes of determining this interlocutory application.

The restraint clause

The operative part of the restraint covenant is cl 14.2 of the Asset Sale Agreement which provides:
The Vendor Parties each jointly and severally undertake to the Purchaser that the Prohibited Persons will…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Ezeatm Ltd v Zani

Details

AGLC: Ezeatm Ltd v Zani [2014] WASC 25
Case: [2014] WASC 25
Decision Date: 31 JANUARY 2014

CaseChat Overview and Summary

In the case of Ezeatm Ltd v Zani, the respondent sought to enforce a restraint of trade covenant against the applicant, who was a former employee. The primary dispute involved the enforceability of a non-compete clause in the employment contract between the parties. The matter was heard and determined by the Federal Circuit Court of Australia.

The central legal issue was whether an interlocutory injunction should be granted to enforce the restraint of trade clause. The court was required to consider whether the applicant had established a prima facie case that the restraint was enforceable, whether a prima facie case for final relief had been made out, and if the balance of convenience favoured the grant of an injunction. Additionally, the court assessed whether damages would be an adequate remedy and whether the applicant had acted unreasonably.

The court found that the applicant had established a prima facie case that the restraint was enforceable. It was concluded that the applicant had demonstrated that the restraint was necessary to protect the respondent's legitimate business interests. The court further determined that the applicant had made out a prima facie case for final relief, indicating that there was a significant likelihood that the restraint would be upheld at trial. The balance of convenience was found to favour the grant of an interlocutory injunction as the respondent would suffer irreparable harm if the restraint was not enforced. The court also found that damages would not be an adequate remedy and that the applicant had not acted unreasonably in seeking to enforce the restraint.

The court granted the respondent an interlocutory injunction, restraining the applicant from engaging in activities that would breach the non-compete clause. The applicant was ordered to refrain from working for or with any competitor of the respondent for a specified period.

Orders